My Two Cents

The Decline in Economic Mobility

Chris Farrell Apr 23, 2008

Most Americans are well aware that we have greater poverty here than in Europe. We don’t redistribute as much money from the well-off to the poor. America relies more on charity and the non-profit sector to deal with poverty than government, too. But the main response to these observations over the years has been, “so what?” America has a lot more social and economic mobility than Europe. We’re a bootstrap nation.

Problem is, America and Europe are similar when it comes to economic mobility. Harvard University economists Alberto Alesina and Edward L. Glaeser reviewed the recent empirical literature in their book Fighting Poverty in the US and Europe. The message from their literature summary is that there may be slightly more mobility in the American middle class than in Europe, but the difference is so small its insignificant. But in the U.S. if you’re born poor the odds are you’ll stay poor. The same isn’t true in Europe.

For instance, according to one study they review, a comparison into mobility in the U.S. and Germany, about 60% of the bottom quintile of the U.S. population stays in that low-income group over the nine years studied vs. 46.3% in Germany. “If anything, the American poor seem to be much more ‘trapped’ than their European counterparts,” write the authors.

What’s more, considering the striking increase in income inequality in the U.S. over the past three decades, the risk grows bigger that the promise of equality of opportunity is turning into inequality of opportunity.

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